Public-Private Partnerships: How does Kenya fare?

The World Bank Group’s recently-released report, Benchmarking PPP Procurement 2017, assesses the capacity of 82 countries, including Kenya, to prepare, procure and manage public-private partnerships (PPPs) based on the prevailing policy, legal and regulatory framework and evaluates this data against generally accepted good practice.

How does Kenya fare?

Of the 20 Sub-Saharan African (SSA) countries reviewed in the report, an average of the scores given for each area assessed reveals that Kenya is among the top 10 in the SSA countries, with its East African neighbor, Tanzania, scoring the highest.

While Kenya has a fairly robust PPP framework, which is largely supportive of the many PPP projects currently in the pipeline, there is room for improvement. The report identifies a few areas that require greater clarity and/or review, including:

Sole bidder scenario – Kenya’s PPP framework is silent on the steps to be taken where a procuring entity receives only one bid in response to a PPP tender. Would the bid be considered non-responsive, thereby necessitating a fresh tender process? Should the procuring entity proceed to carry out due diligence on the bidder, and award the tender if the bid meets the tender requirements? How would the procuring entity ensure there is value for money? Whichever the approach, the report aptly states: receiving a single bid may be problematic and thus merits attention through the PPP regulatory framework.

Unsolicited PPP proposals – In an unsolicited PPP process, as opposed to the procuring entity soliciting for bids through a competitive tender process, the private party initiates and submits a proposal to undertake a PPP project. In Kenya’s PPP law, this is referred to as a privately initiated investment proposal, and is permitted in certain circumstances. According to Benchmarking PPP Procurements, however, of the economies that were assessed, only two countries – Kenya and Vietnam – do not require a competitive process for evaluating unsolicited PPP proposals. The introduction of competition may therefore be considered, so as to increase the likelihood of obtaining greater value for money.

Sub-national PPP framework not assessed in the report

One area that was not assessed in the report is the capacity to undertake sub-national PPPs. In many jurisdictions, public infrastructure development and service delivery through PPPs is not only taking place at the national level, but also at the sub-national level. In the case of Kenya, the constitution allocates various public functions to either the national government or the county governments. Counties are, for instance, responsible for key infrastructure and services such as county health facilities, county roads, water and sanitation services, or waste management. Counties have therefore started looking at PPPs to deliver some of these services; currently there are proposals before the National Assembly to amend the Public-Private Partnerships Act of 2013 to provide clarity on the framework governing county PPPs. An assessment by the World Bank Group of the framework governing sub-national PPPs in various countries would therefore have been useful.

Kenya’s PPP space looks promising

While the Kenyan PPP law is relatively new, having been enacted in 2013, the 2017 Budget Policy Statement reveals that private investment in public infrastructure has been taking place since 1996, with the first such investment being in the energy sector. Progressive legal and regulatory reforms have enhanced private sector investment in public infrastructure and services, with the number of projects in the National Priority List of PPPs currently standing at 64 (as reported in the 2017 Budget Policy Statement). According to Stanley Kamau, the Director of Kenya’s PPP Unit on Kenya’s keys to success, the country “has emerged from the initial stages of building and strengthening the regulatory and institutional framework for PPPs at various levels, and has now moved on to the actual implementation of an ambitious project pipeline.”

There is room for improvement, for instance in the framework governing a sole bidder scenario, unsolicited PPP proposals, and sub-national PPPs, but all in all, Kenya’s PPP space looks promising.

Disclaimer: The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.

There is currently no legal framework for county PPPs, although draft legislation is currently under development. In addition, for counties to gain the confidence of investors and other PPP players, they need to structure sustainable projects with long-term, reliable revenues. Unlike the central government, they are yet to create their own credit history and this is one of the most critical considerations for the private sector players.